War of ideas
Do you see napkins flying around?
Watching the emergence of startups in Silicon Valley reminds me of 1999, when a plethora of two-person shops -- that got funding with just a business plan scribbled on napkins -- competed for the same mindshare and dollar. To some extent, the same frenzied environment is shaping up today: Competition is cutthroat for the same eyeball and the same buck.
Venture capitalists -- seeking to fund their own winner -- are investing in similar companies that essentially are doing the same thing. Look no further than video-sharing sites. Blue-chip venture firm Kleiner Perkins has Akimbo, which hosts more than 10,000 shows. Sequoia Capital has YouTube, whose most popular video was watched 9-plus million times. Every VC will have their own Internet TV startup, I’m sure. RipeTV.com -- the Web version of SpikeTV -- is expected to announce a round of VC funding soon, I hear.
VCs are filling the pipeline because they know traditional companies fear their extinction in the new media age and are hungry for ideas. And, while venture investors’ raison d’etre is to disrupt the status quo, in a twisted way, they’re competing with the startups they embraced only a few years back. Google, which was funded by Kleiner and Sequoia back in 1999, is trying to win in the video-sharing world with Google Video.
The cash is plentiful on both sides. Last year, venture capitalists raised $24.2 billion, which was spread across 199 new funds, according to Dow Jones VentureOne. It’s the highest dollar amount raised since 2001.
Google has $8.43 billion in cash and cash equivalents. Yahoo has $3.8 billion in cash and cash equivalents, is also considering launching its own user-generated video service. Microsoft , which owns MSN and has $34.8 billion in cash and short-term investments, plans to launch its own video sharing service, code-named “Warhol,” that will integrate with its MSN Video and MSN Spaces services. At the same time this user-gen world is cluttering the media landscape, there's another kind of digital content being created as well. This time, it's from people who are already creating content for a living. They are those who have ties with traditional publishers and agents, but are now creating new content that can give them a greater piece of the pie. I call them free agents. IAmplify just got out of stealth mode about 3 months ago. This Manhattan-based company is helping these free agents. Read about iAmplify's business model on MarketWatch.
Read NYTimes on Google/MSFT arms race
Read SJ Mercury News on eBay/Google strained relationship
Check out Yahoo's rival to CNet - Yahoo Tech channel
Your article concerning "free agents" was very informative and helped me clarify the business model I am developing for my podcast content network, PodcastBuffet.com.
PodcastBuffet is a network of different websites (in development)dedicated exclusively to particular areas of content.
For example:
GardeningPodcasts.com, YogaPodcasts.com, PersonalTrainerPodcasts.com, CollegeLecturePodcasts.com, etc.
I have problems with many of the directories because they are simply
throwing the content into categories and don't seem to have any quality control measures in place.
While I believe there will be an increasing amount of very good user generated content developed (especially once creators can share in profits -as iAmplify offers)but right now there is simply too much
clutter.
I believe that it is going to take awhile to sort out the best stuff from the garbage. The problem is, you don't want your visitors doing the sorting.
That's why I like the iAmplify model. It makes sense to offer pre-screened, or at least reputable sourced content for a subscription because then everybody gets what they want out of the transaction.
Subscriber - Solid, reliable content from reputable authorities on the subject specific to their interests.
Content Provider - Residual payments/profits that grow with the number
of downloads.
Host - piece of the action
That is basically the same model I have been tinkering with for PodcastBuffet. License quality content very focused in a particular category such as Yoga, Indie Rock, Theater, whatever, and share the
profits to incentify the content providers.
I think you have to make sure they see the money flow so that they continue to develop top notch podcasts/video downloads to keep things fresh. I'll add/license more talent as the subscriber base and content specific advertisers increase in volume.
The additional benefit of a website dedicated to a specific category is that I want to build a community around the podcast subject. This gives me feedback, threads, people helping people, all within a contained, behaved and respectful environment. Similar to a MySpace but not the level of chaotic interaction.
Essentially, more mature and closely monitored for spam, porn, etc.
My reasoning for sticking with rather generic domain names is this: There are so many video download websites popping up that finding podcasts or streams tailored specifically to your interests starts not with the RSS feed, but with getting the eyeballs to your webpage via a conventional keyword search first.
Yes I've heard of companies developing search via spoken words within the podcast.
Good luck.
So I type in keywords or phrases and sift through the millions of semi-relevant podcasts or streams and then try and guestimate approximately where in the stream my beloved phrase/topic lies?
What if I'm looking to download folk music? The content contained within the podcast is a song! The singer doesn't come out and say "folk song". The search is rendered irrelevant! How is this going to help me find my folk music podcast?
And as far as spoken words from say an interview, by the time I review the words via unformatted text lists and figure out in what context the words are used or topic is discussed I could probably have listened to the whole podcast (while I did something constructive).
Why not keep it simple? I'm interested in downloading some meditation audio or video so I'm going to go to meditationpodcasts.com, check out which "casts" are rated highly by users and subscribe. Done friggin' deal.
I guess I'm just lazy.
Right now I've got about a hundred channels/website domains ready to activate. That's Plan A. In the event that I can't raise financing, plan B is where I'm going to target some groups in the video download
business (such as iAmplify, Odeo,etc) and offer the websites as domain "drivers" to particular categories within their websites. That would suck if it comes to it, but unfortunately, money doesn't grow on trees outside Silicon Valley.
If you've got time for some feedback great, if not, I just thought I'd
share the concept with you and thank you for the great articles lately
on the web-video explosion.
Erik Blakkestad
info@PodcastBuffet.com "FEED YOUR POD!"
Posted by: Erik B. | May 03, 2006 at 12:32 AM
I read this article with great interest and at least at little bit of surprise.
I should first admit that the Hidary brothers are far more successful than I am or ever will be, so my observations need to be weighted accordingly. Reading their bios and storied accomplishments made me hesitant to even offer this feedback. Given the choice between betting on the opinions of a college-dropout versus those of megamillionaire neuroscientist philosopher philanthropists, the smart money is on them.
We (Despair.com) have been in the content creation business since 1998, selling satirical products directly to our audience (mostly parodying the motivational and self-help industries). We have built up an online base of several hundred thousand customers over the years. Most of our products are manufactured goods (posters, calendars, candies, etc.) and thus they have to be physically distributed - but we have started recently to experiment with digital content distribution (videos, screensaver).
The area of video is of particular interest to us, as our early experiments with it have produced pretty significant revenue and traffic results for comparatively small cost. We believe that video is going to be an essential part of our content offering in the years to come, and thus the subject of digital distribution models is top of mind for us right now.
In my opinion, there seem to be a couple potentially problematic aspects to the iAmplify model for a content creator, at least as I understand it.
1) 50% SPLIT OF REVENUE. - My personal belief is that this model will be viable for a season- but that long term, market forces are going to force that revenue split to better favor the content creator. Google video offers a 30/70 split currently. Admittedly, Google Video isn't perfect, yet one has to assume that they are going to throw millions of dollars at this, refining the offering to catch up with the elegance of Apple's iTunes. Apple, meanwhile, is reportedly working to develop tools that let individual content creators (video podcasters, etc.) actually SELL their content, or subscriptions to it- recognizing that Google is already providing this valuable offering, despite the clumsiness of the first beta. Given that Apple's DRM is first rate, and it's only a matter of time before they make HD video a part of their software solution (at itunes) and hardware solution (via a next-gen video ipod), I have to believe that they are positioned to offer a pretty attractive solution to content creators like us. It seems to me reasonable to assume that what is currently a 30/70 split may quickly race down to 15/85 or 10/90, in a race for marketshare.
2) EXCLUSIVE RIGHTS TO CONTENT- This, to me, seems far more problematic. I recognize that many content creators may not consider signing away their rights to be a big deal- FOR THE MOMENT - but for me and for many of the individuals I've spoken with who have similar businesses to Despair (content creators who are doing video, too), this would definitely be a dealkiller. The more successful the content creator is in creating compelling stuff, the more incentive he/she has to protect their rights to monetize their content in as many forms as they should wish. Losing those rights is not in their short or particularly long term interest, it seems to me.
I admire very much that Jack Hidary is trying to right an obvious market wrong, with respect to the bogus royalty splits offered in the DVD and publishing industries. And certainly, 50% is very generous split compared to historic norms. I also agree that Hidary's specific facilitation of private-label selling directly via the creator's site is critical- because as a content creator with a semi-large online following, I don't want people to leave our site to experience our wares if they don't have to.
Even though I think there are certain troublesome aspects to the model, I personally have the sense that people who are as bright and successful (and it seems good-hearted) as the Hidary brothers are going to succeed regardless. I think though that refinement of their model in the long term may be necessary in order to remain competitive and compelling to those in the content creation universe.
Cheers,
Justin
Full disclosure: Our sister company, Amplifier (amplifier.com, no kidding), provides private-label, direct-to-audience distribution services (internet fulfillment, customer service, etc.) for Despair and dozens of other businesses and content creators.
Posted by: Justin Sewell | May 03, 2006 at 10:54 AM
The challenge for Internet video “free agents,” as I see it, is in scrapping the legacy horizontal video enterprise models of the past, where videos of all kinds were lumped together K-Mart style (movies in aisle 2, books in aisle 4, etc.), to more vertical video enterprises, such as iAmplify and PodcastBuffet are attempting, that target psychographic rather than demographic markets. That is, instead of trying to monetize the 18-49 video viewer with all kinds of stuff like a mini-me broadcaster, online video entrepreneurs today must build creative business models around narrowcast video channels, like mini-me cable programmers, to effectively compete in the future world of online video networking.
Though I like their psychographic approach to content creation, I have my doubts about the viability of iAmplify and PodcastBuffet as a viable sites in the long run. iAmplify strikes me as a site full of infomercials, which might have an audience for a time, but to acquire loyal repeat visitors one must have a constant supply of fresh video content. PodcastBuffet seems to be on the right track conceptually, but when you drill down on content acquisition, I wonder where it will come from and what kind of quality one could expect. In short, I wonder if both of these business models suffer under the strain of horizontal thinking. But who am I to say...?
I became a “free agent” in 2002, when I launched my vertical video brainchild, iReadNet (www.ireadnet.com), after three years of research and development.
iReadNet’s business model is a traditional media business model—using news to create site traffic—except that instead of selling advertising space, we sell video production, networking and book publicity services which allow authors to sell their books and ancillary products more efficiently and effectively. In fact, we don't sell anything on iReadNet, so we don't have issues with royalty splits, etc. Our video book tour services are paid for by the author or publisher. For our news channels, we acquire content by virtue of press passes to book and author events, where both world famous and emerging authors are almost always more than happy to grant face time with our cameras in order to promote their work. With our news sources, we are able to constantly add fresh content featuring some of the most interesting fiction and non-fiction being published in the world today.
These are some of the significant milestones since the original iteration of iReadNet:
--launched Pubbuzz Author News and Book Reports (www.pubbuzz.tv) in 2003 with
videos of BookExpo America, including the infamous shouting match between Al Franken and Bill O'Reilly
--launched CooksRead (www.cooksread.tv) and KidsRead (www.kidsread.tv) author news and book events channels in 2004
--reached over 2 million visitors in 2005
--averaged 10,000 visitors per day in first quarter of 2006
--launched "private label" video networking system enabling publishers and authors to
manage their own video content under their own “brand” from their own desktop in March 2006
--800 video clips of 110 author readings, interviews, lectures from BookExpo America,
Miami Book Fair International, Frankfurt Book Fair, New York Is Book Country,
universities, and bookstores available for free viewing on-demand
Of course, our video book tour services are pretty high-end for the average author, but stay tuned—in the coming days we’re launching a video blog called AuthorCams using webcams, P2P file sharing, and streaming media to enable published, unpublished, and self-published authors to crank up their personal buzz machines faster and cheaper than a wine, cheese and crackers party at the local bookstore.
When I go to book fairs, it's usually C-Span and iReadNet covering the show. Frankly, I don't understand why there aren't more competing online video journalists at these events. Am I'm just lucky--or does everybody know something I don't?
Kurt Aldag
iReadNet
“the missing link”
www.ireadnet.com
Posted by: Kurt Aldag | May 03, 2006 at 01:42 PM
After reading the comments shared after my earlier post, I'd like to share these thoughts concerning my business model for podcastbuffet.com.
1. It's still a work in progress and I think we are all learning things on the fly as this online audio and video content revolution unfolds.
2. Concerning content creation: As far as self-help and DIY material goes, I believe the content will be the commercial and vice-versa.
Here are some examples of my scattered, fly-by-the-seat-of-your-pants-thinking.
A gal visits homeimprovementpodcasts.com to watch a download about how to install an automatic garage door. The "cast" starts out with a five second sponsorship blurb by Stanley Tools. Then it starts out with a guy wearing a Stanley Tools hat and shirt explaining what tools are required to install the door. You guessed it, CUT TO: CLOSE UP Stanley screwdriver, hammer, etc. After almost thirty to forty seconds of Stanley Hardware product placement/advertorial, the guy gets down to business fixing the (drumroll please: Stanley Garage Door). In fact (and I shouldn't even say this because it is THE CRUXT of my whole scheme) the consumer is directed to watch the video podcast as a supplement to the instructions! Total product immersion via an "always-on", time-shifted, bonding experience with the consumer.
The model doesn't work for everything but can be applied to many self-help, personal growth activities. And the distribution model is going to change retail forever.
Think of an aerobics video tape. In most cases, a celebrity like Cher or somebody else leads a group of people through a chroegraphed workout that is video taped, packaged and sold in the millions by the distributor. The taped workout and post-production takes less than a week. The packaging and distribution channel is where the heavy lifting and majority of expenses occur.
The internet eliminates the distribution channel and replaces it with a video podcast or stream directly to any of the consumers chosen media devices such as pc/Mac desktop, ipod/mp3player, video enabled cellphone and soon (and most importantly) their DVR hardrives for their television.
The value is the content. The key is to capture eyeballs in an increasingly vertical oriented media marketplace, where pressure to replace the eyeballs lost to TIVO addicted, ad-skipping, time-shifters forces marketers to get off their butts.
The point is, with the onset of time shifting, advertisers really have no choice but to integrate themselves into the downloaded video content. But consuumers see right through the pepsi can being held properly for the camera during "That 70's Show", etc.
I believe you have to attach meaningful brand experiences that hit home with the consumer on an emotional level when that opportunity arises - as in: "Thank you Stanley Hardware for helping me install my garage door and save money by being able to do it myself".
Erik Blakkestad
PodcastBuffet.com "FEED YOUR POD!"
Posted by: Erik B. | May 03, 2006 at 03:28 PM
I think there is going to be increased emphasis on vertical search. People have focused on travel search, video search, and shopping search, but there are other categories too. Look at http://www.allreaders.com . This site lets one search for books by very detailed plot, setting, character and style elements. It's focused on book (and movie) searches, but gets over 2,300,000 visitors per month (I read somewhere that giant Barnes and Noble, by contrast, gets about 6 million). I think this kind of specialized search engine will appear more and more, and take more market share from traditional search engines.
Posted by: Steve | May 04, 2006 at 07:35 AM